At the law firm of Schlagel Long LLC, we are committed to providing our clients with superior legal counsel in the areas of estate planning, real estate law, business formation and trust litigation.

November 2018

11/17/2018

Need an executor for your estate? Don’t rush, think it through carefully and make the right choice.

It would be wise to have a conversation with your heirs that you most likely do not want to have, and it would be best to have that conversation sooner rather than later. That conversation is about your estate plan and among the important decisions to make is your choice of executor, according to the Twin Cities Pioneer Press in “Your Money: Qualities of an appropriate estate plan executor.”

Selecting an executor is not a decision to make in a hurry. This is an important decision with far-reaching consequences for your family and should be made thoughtfully.

Your estate planning attorney has walked down this road with many clients before. A conversation to explore possible individuals who would be able to serve in this role could be helpful in clarifying your understanding of the responsibilities and the best person to ask.

Most of the tasks of the executor relate to distributing your assets after you are gone. Consider who you would trust, right now, to handle all your money and property, because that person is the one who will be overseeing everything. They’ll be serving as your legal representative, making decisions as you have directed in your will. The right choice will give you the confidence that your final wishes will be followed.

One fact to keep in mind: the person you select as your executor will need to outlive you. That means they ought not be a parent or older sibling. Most people name their spouse, a child, niece or nephew or a trusted friend, preferably one who is a little younger than you.

Your executor will need to have an intimate knowledge of your life, your goals and your relationships. Someone who is a dear friend to you, one you trust unquestionably, is a good candidate. They should be someone who knows about any debts, financial or otherwise, that you’d like to address in your estate plan.

Just because you want someone to serve as your executor, does not mean that they want to take on this role and the responsibilities. Depending on the size of your estate, or your family’s dynamics, this could be a very time-consuming effort. Have an in-depth discussion to make sure they understand the responsibilities, if they choose to accept the role.

Keep in mind that the person you select may have to stand up to various family members. If your family has some tough dynamics or headstrong personalities, you’ll need someone who will be comfortable with unpopular decisions. Some individuals relish this kind of a challenge, while others shrink easily. Keep that in mind, when making your selection.

An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances.

Decide where you want to locate and then study the opportunities and drawbacks.

So, you are retiring. Where do you want to live? What’s the attraction? What is the cost of living? Taxes? Medical facilities? The list is long but there are some factors to look into that can be helpful in the decision making, according to MoneyWise in“Sun? Low Taxes” The Top Factors When We Pick Where to Retire,”

The biggest factors:

Politics. Check into the local political scene. Make sure you’re comfortable with the predominant political culture. Don’t neglect a look at how well—or not—the local municipality is working. Are state and local governments working well at running the area or is it a disaster? If you are counting on social service agencies, for instance, you’ll want to be sure they are in good shape. Too much local in-fighting can doom even the best agencies. Local newspapers and websites are a good source.

What do they do for fun around here? A non-golfer in a golf community is a non-starter. What kind of activities are in the area? For instance, if you move to Colorado, you can count on a lot of hiking trails. If Arizona is your destination, make sure there are indoor fitness centers for when the temperatures become very high. Consider what you’ll do on a regular basis. Will you be able to get into the programs to enjoy them or is there a waiting list?

Can you get from here to there? A rural location may be inviting, but what if family and friends want to visit? If travel is a big part of your retirement plan, you don’t want to be too far away from the airport. That will help making traveling to and from your destination easier and will encourage friends and family to visit more often. If you do go for a rural location, having an airport nearby makes it more likely that you’ll be able to receive health care items, electronics and other things that may need to come from far away.

What’s the tax rate? You’ve paid enough taxes during your working life. Take a look at the local tax rules. How much, if at all, is retirement income taxed? What about estate or inheritance taxes? Don’t forget the basics: gasoline taxes, property taxes and land transfer taxes. Some people move overseas to stretch their retirement budgets and different countries have different tax laws for expatriate retirees.

What’s playing where tonight? Retire to Vegas and you can go to a different show every night of the week. If you are a museum buff, New York City abounds in large and small museums. Living near a college or university, is likely to mean you’ll have access to performances of all kinds and at lower costs.

How diverse is your community? Score another point for living near or in a college town. Here’s where you’ll find a richer community life, more social activism and a wider range of different opinions. College towns usually offer retirees the ability to sit in, or audit, courses.

Climate counts. Many retirees from the north can’t wait to head south, when they retire. They’re done with shoveling snow, worrying about falling on icy sidewalks and driving in slushy messes. Others prefer the cold, finding it invigorating and don’t want to give up their skis. Consider what temperatures you like now and what might suit you better, as you and your spouse age.

How much does it cost? Your lowered income must be matched by a lower cost of living or you won’t be able to afford your own retirement. Consider the costs of transportation, property taxes, groceries and home heating/cooling in your potential new hometown. It all adds up.

Health care matters. Even the healthiest seniors, know the value of good quality healthcare. As you age, chances are you’ll need more health care. Moving to a community without a good hospital and lacking qualified specialists puts you at risk.

Safety. We don’t often think of safety as we age, but we should. As we age, we become more vulnerable to crime. Look at the crime statistics for any new communities you are considering. What does the economic data look like? Would you be able to use public transportation without worry? What about driving alone in your car at night?

Once you narrow down your choices, start by taking extended vacations. Talk to the local people, at the library, in the coffee shop and around town. Attend services of your faith. Read the local newspapers. Get a real feel for the community to find out if it suits you, before you start packing.

Just as any other asset, intellectual property rights and royalties can be transferred to a living trust to avoid going through probate. By using a trust rather than a will for these types of assets, you avoid the costs and delays of the probate process.

Another advantage of placing assets in a trust is that their value, the names of beneficiaries and their inheritance amounts are not public and available to the individuals who comb these records seeking information. The average person isn’t devoting time to searching probate records. A sales person or scammer is more likely to be digging into these personal details.

Depending on the nature and value of the intellectual property or royalties, privacy alone may be reason enough to place these items in a trust.

Like digital assets, intellectual property and royalties are frequently left out of estate plans. If ignored, serious financial issues can be created. If a will is used, the intellectual property is part of the probate proceeding with the beneficiaries named and the values stated.

For the heirs of those who fail to create a will or place property in a trust, the headaches are bigger. In that case, the assets go through an administrative proceeding, under the laws of “intestacy,” or dying without a will. If you die without a will, assets go to the spouse and children, about half and half. If there is no spouse and no children, assets go to parents. If parents have already passed, then assets are distributed to siblings. If a sibling has died, the sibling’s share goes to his or her children.

The joke about people who die without a will, is that they do have a will, it’s just not the one that they may have wanted.

An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and could include intellectual property.

Many people retire in the snowy north and head to the warm south for a few months each year. If that is your scenario, it would be wise to keep that estate plan current because state laws are not usually the same and your plan needs to take that into account, according to The Indiana Lawyer in “Multi-jurisdictional estate planning requires research, collaboration.”

This multi-state thinking applies to anyone with property in more than one state—or countries. How then can they figure out how to administer their assets after death, if they are spread out across the country or around the globe?

The process sounds simple but it’s not. Their estate planning attorney needs to understand and advise them about the laws governing each of the jurisdictions where they have assets. It requires extensive research and may need the help of other attorneys working together. If the cost is a concern, understand that the cost of doing this after death will likely become far more complex and costlier.

The first step is to identify the assets and where they are located and then determine where the client maintains legal residence.

People often have property in a few states, as well as bank accounts in a few states. Tangible assets, such as real estate, and intangible assets, such as bank accounts, are treated differently in estate planning law.

Tangible assets are typically governed by the law where the asset is owned, while intangibles are governed by the law of where the client resides. One way to simply this process is to put all the assets into a revocable trust, which avoids probate and helps client avoid multiple ancillary estates.

However, estate attorneys will need to know the estate law of other locations to help their clients make the right decisions for their assets.

Many states have probate laws with similar general principles. However, the details are different. One example: a trust that was properly executed in Indiana was ineffective under Florida law, because of the lack of sufficient witness signatures. It was a small detail, but one that made all the difference.

The problem becomes even more complex, when the person has assets in foreign countries. In some countries, forced heirship will actually prohibit citizens from dictating where their assets go after death. In these countries, a certain percentage of a citizen’s assets must go to their children, spouse, etc. And some countries don’t recognize the concept of a trust, so creating a revocable trust to avoid ancillary estates won’t work.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and may include multiple states.

11/02/2018

Researchers at the RAND Corp. in the U.S. and a think tank in The Netherlands have determined that personality has an impact upon the decisions made by employees who are considering retirement, according to Think Advisor in “4 Personality Traits That Influence the Path to Retirement.” Personality and cognition tests were included in the 14 years study of older Americans.

Only about a third of people who are older and working full-time go straight into retirement. Most zig-zag, maybe reducing their hours, dabbling in a consulting practice or finding a place in the new gig economy. Other people retire, then decide it’s not for them, and go back to work, sometimes on a full-time basis. Other times, depending on their situation, they opt for part-time employment.

Here’s what the researchers found:

Cognitive Ability–People with higher cognitive abilities have an easier time remaining in the workforce, even though they are getting older.

Extroversion—People who naturally seek out other people and situations outside of themselves, tend to keep working after age 65. Even after age 70, this group is the most likely to be working full-time. Extroversion also pulls some people out of retirement.

Conscientiousness–People with this personality trait often work well past age 62. However, it has less of an impact after age 65. Maybe conscientious people are better prepared to retire!

Agreeableness—People who get along with others, are most likely to keep working after age 65.

Neuroticism and openness to new experiences—These personality traits have very little to do with how long people work.

Before deciding to retire, it makes sense to examine your reasons for retirement. Your personality may not flourish in retirement, where being actively engaged would be better for your mental and physical well-being.

11/01/2018

Baby boomers often face the difficult task of cutting expenses and selling the family home. However, life can be simpler and happier, if you follow these steps.

As the family ages and is often reduced down to two, the idea of cutting back on expenses and number of rooms can be daunting. However, it doesn’t have to be, according to U.S. News & World Report in “7 Tricks for Downsizing Your Clutter.”

Get moving. Sometimes you need a concrete reason to begin, not just the sense of impending doom that will happen if you don’t. Maybe you have an adult child moving back into the house and they need a room, or you’re putting the house on the market and getting ready to go south. You need a good reason to get going. If you don’t have one, make one up—like getting the job done before the year is over or you go on a long-awaited vacation.

Stop buying new stuff you don’t need. At this point in your life, maybe you’ve moved past the superficial need to buy and are more concerned with what you are doing with your life, not what you own. Getting rid of clutter means tossing things that don’t have a lot of meaning but keeping the things that do. You might enjoy a painting from a memorable trip, more than a houseful of trinkets.

Start planning. If you love to make lists, here’s your opportunity. Come up with an order of how you want to tackle this big task, breaking it out into separate pieces. Who will share these tasks with you? Do they work better with a firm deadline? You should also create a strategy: will you donate certain items and what organization will be the recipient? Do your kids need to make a trip home and move their stuff into their own homes? Delegate and set deadlines for everyone, not just yourself.

Pivot the concept. You’re not getting rid of everything, you’re selecting out what matters. If an item brings you joy just to look at it, keep it. However, get rid of everything else. If you think someone else wants an item, ask them. Your goal is to curate your “stuff.” You should love what you have, but only have what you love.

Be decisive and accept that it may take time. You may not yet be ready to get rid of certain things. You may need to go through this process in stages, especially if you’ve recently suffered a loss. After going through everything in the house once, you may start to become comfortable with the idea of letting go. Take a break between purges. What seemed important one month ago, may not seem important now.

Rent a storage space. If you really, truly, cannot part with a lot of stuff and you’re moving, put your stuff in a storage space. Go back in a month, after you’ve had to pay for that space, and take another look. You may find it doesn’t matter quite as much.

Relax and enjoy your new decluttered life. The focus of decluttering is to stop carrying the past around with you. Consider yourself as having a fresh start, with little or no baggage. Then go out and live your best life.